New twist in the MedPoint Affair


It will be recalled that the Leader of the Opposition had stated some four weeks back that he would have been informed that it was the Prime Minister who would have requested a second valuation of the MedPoint Hospital after a meeting he would have had with the major owner of the property. The PM immediately denied his involvement in the matter and made a statement to the police to this effect. The Leader of the Opposition was called up at the CCID office on Tuesday morning in this connection, presumably to investigate a possible case of diffusing false news. He decided not to be present at Line Barracks on the view that he has not been advised by the Police about the charges laid down against him and that he was entitled to this information before being called up. This is a matter requiring interpretation of the rights of the parties involved in the case. At the time of writing, we are not aware of the exact circumstances in which the Police had summoned the Leader of the Opposition to their headquarters. It is persons close to the MMM who have stated that the Police intended to arrest him but we have no information that this was indeed the case.

We understand that it is the Constitutional right of the Leader of the Opposition to refuse to make any statement to the Police in the matter and that the Police is free to refer the whole matter for a judicial process, in which case the Leader of the opposition would be answerable to the court.

Much will depend on the skill with which the Police will handle the case. It is clear however that no one should overstep the limits. If the whole issue is dealt with within the parameters permitted by law, the risk of overspill into the political domain will be avoided while institutions will get the amount of respect that they deserve in the fair discharge of their duties. The MedPoint affair is already a major distraction from material issues of important concern to the country; it should not become the launching pad for further disruptions in the country.

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On the Economic Front

The newly appointed Minister of Finance is due to present the national budget in few months. Apparently, the Ministry’s officials have been putting it into shape from before. This would mean the Minister would have to introduce the policy angle which he deems fit for the occasion and give it the desired orientation. In any event, the past has proved that we should not expect a sharp departure from established trends.

That is borne out by facts on the ground. Given the mild rates of economic growth we have been experiencing the past years, there is little scope to extend welfare state measures over much, unless it is to be done by trimming down certain ill-advised across-the-board benefits given in past years. That would involve reviewing decisions like granting free bus transport to all senior citizens and hence cutting back on regular large sums of money being forked out to bus operators for bills that have not always been accounted for with precision. In fact, welfare policies undertaken on this basis will amount to a reshuffling of benefits among welfare recipients. It is not a bad idea to redirect benefits so that social spending is better targeted and waste reduced.

If there is addition to existing welfare benefits, however, this will call for more taxes to be raised. This is a decision that will have to meet a test of logic: either there is enough economic growth or untapped tax potential that has escaped notice in the past for the government to raise additional revenues to meet increase in welfare spending. Or, notwithstanding the slow pace of economic growth, taxpayers are made to squeeze in some more of their incomes towards the Exchequer by paying up additional taxes. Fairness dictates that any such efforts will have to be made by both private individuals and corporates. As we know it, economic growth is tepid and un-sustained by the pace of growth of our external markets. It is true that export manufacturing has grown by over 12% during the first 6 months of 2011, which shows that things are not as bad as the operators paint it out to be.

There is always the uncertainty however in a market in which the pace of demand is rather depressed and we need to keep that in view. Our upmarket tourism is apparently slow-paced. According to the hotel owners, room occupancy is currently lower than the usual seasonal trough in the sector. Whether the hotels have been proactive enough to outbid competing markets by offering timely packages suited to the economic times prevailing in our key markets is a point that deserves to be debated. Discussing issues like this will keep the burden of adjustment being unnecessarily shifted to Air Mauritius and helping predator airlines to engulf the start of recuperation of the national airline from its catastrophic mismanagement of recent times, including its miscalculated hedging activity. It is quite possible on the other hand to give a boost to sectors which have been doing well and sustaining economic growth irrespective of lack of buoyancy of the global economy. This is done by improving their competitiveness such as by reducing their basic input costs. We have the ICT/BPO in mind, a sector of activity which by its remarkable resilience has kept up employment in the country despite the depressed conditions of the international economic crisis of 2008-09. Such sectors need a lift-up from policy-makers.

In any event, the macroeconomic condition is a much wider chapter which is riddled with uncertainties for the moment. The good magician knows how to sort out the riddle and make sense of it to get at the appropriate solutions as circumstances change. The trick is to create the conditions for a small, but nimble, country like Mauritius to make inroads on otherwise difficult markets. A good combination of focussed policy can produce miraculous outcomes which should be sufficient to tide us over the storm. This consists of expanding our productive horizons without squandering the limited resources of the country. This goal is achieved through careful planning and developing adequate foresight and gathering enough skilled resources to get us firmly onto future markets. We do not appear to have grown this kind of sustainable outreach yet. A lot of synthetics but too little of groundwork to prepare future markets, unfortunately.

This is evident from the manufacturing sector’s current demand for currency depreciation where a short term horizon is being preferred to laying down the foundation of the future. We have noted above that manufacturing exports have grown by 12% or over Rs 20 billion in the first semester of this year compared with the corresponding half of last year. It cannot therefore be said that the re-stabilisation of the rupee after the debacle of the exchange rate in 2006-07 has prevented our export sector from showing an acceptable rate of growth. The evidence that its performance has not been dented is on the table if only looking at the sector’s performance during the previous semester. One has to study the improvements in productivity and market penetration that have accompanied this kind of growth to be able to assess factors beyond currency depreciation that can be used to sustain the further growth of this sector.

We are used however to the export manufacturing sector picking up the currency factor as its main preoccupation, the more so as a new Minister, said to be more in tune than his predecessor with the private sector, has taken on the portfolio. Besides, the Monetary Policy Committee of the Bank of Mauritius is scheduled to have its next meeting on 12 September 2011. Fair enough that the private sector sends out signals beforehand for it not to disturb the zone of comfort in which it is currently operating. However, as the Governor of the Bank of Mauritius has stated, his duty of care extends to all stakeholders in the economy. He cannot be seen to be privileging one group of producers to the detriment of everybody else, even though we may expect him to be sympathetic to the fears of the private sector.

We are confident that he would not make it tougher for the manufacturing sector to post continuing quarters and semesters of good growth without giving importers a pretext to hike up prices. Already the behaviour of the rupee’s exchange rate has given importers plenty of scope to scale down their relentless drive to push up prices consistently but they have not taken the opportunity so far to show that they mean well towards the population. It is a difficult job for the central bank to strike the balance and importers may find it well advised not to wear thin the patience of the authorities on their price practices. No doubt, the new Minister of Finance also has a fair hearing with them as well. Both the central bank and the Minister would do well to keep the interests of the population on the top of their agenda.

* Published in print edition on 1 September 2011

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